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Consumer sentiment shows surprise increase in October

Irish consumers became more positive in October, apparently finding more reasons to be optimistic about the economic outlook.

Consumers became more optimistic about their financial outlooks, in a move that surprised analysts.
Consumers became more optimistic about their financial outlooks, in a move that surprised analysts.
Image: Leon Farrell/Photocall Ireland

IRISH CONSUMERS became more positive about the economic outlook in October, according to new research data published this lunchtime.

The KBC Bank/ESRI consumer sentiment index rocketed by ten points, from 53.3 in September to 63.7 this month – confounding analysts’ expectations.

The measure of sentiment is now at its highest since July 2010, with the ten-point monthly jump marking the third-highest monthly increase since the index first began in 1995.

The increase in general sentiment is also the eighth-largest one recorded since the index began 16 years ago.

The index remains significantly off its long-term average of 88.1, however, and sentiment on the economic outlook and on individual household finances remains quite negative.

KBC Bank’s chief economist Austin Hughes said the increase appeared to be difficult to explain, and said the publication of the index had been delayed in order to ensure that there had not been any error in comiling it.

“The history of the series doesn’t suggest a pattern whereby ‘rogue’ movements are subsequently reversed,” Hughes wrote.

“It would be wise to suspend definitive conclusions until we have another couple of months data but in the absence of any error in the data, it seems that the October reading hints at some improvement in the mood of Irish consumers of late.”

Hughes remained cautious about the improvement in sentiment, arguing that while there had been a number of notable positive developments that impacted on shoppers’ moods, formal announcements like the job cuts at Aviva came after surveying was carried out.

The sharp increase in Irish sentiment was not matched abroad: consumer sentiment in the US increased only modestly, while Australia also saw a significant jump, though its sentiment had been far higher than Ireland’s in the previous months.

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Gavan Reilly

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